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Thursday, February 13, 2014

Why We Don't Want To Be "The Next Red Hat"

Earlier today I read an interesting article at Tech Crunch by Peter Levine, in which he asserts that "there will never be another Red Hat" and more or less lambasts the notion of a company based on Open Source.

We are a company based on Open Source.

So, I guess my first thought should have been "Oh, shit. We're doing this all wrong. Let's yank all of our repositories off of GitHub and close everything immediately."

Yeah.... no.

The truth is, Peter makes an interesting point or two in his article, and some of what he says at the end is moderately insightful. In fact, it reflects some decisions we made a few months ago about how we're going to position some new product offerings in 2014. But nothing in his article really provides any support for the idea that there is one, and only one, successful "Open Source Company".

OK, to be fair, I'll take his word that Red Hat is the only public company who's primary foundation is Open Source. But I'll counter that by pointing out that "going public" is not the sole measure of success for a firm. I'll also grant you that even Red Hat, seemingly the most successful "Open Source company" to date, is much smaller than Microsoft, Oracle, and Amazon.com

Guess what? Almost every company is much smaller than Microsoft, Oracle and Amazon.com. Comparing a company to those outliers is hardly damning them. Truth is, RH is an $11 billion company - nothing to sneeze at. And yes, we have been known, on occasion, to use the phrase "the next Red Hat" when trying to describe to people what we're out to do here at Fogbeam.

Let's look at something else while we're at it... Red Hat are hardly the only successful Open Source company in the world anyway. They are probably the biggest and the most well known, but stop and consider a few other names you may have heard: Alfreco, Jaspersoft, Bonitasoft, SugarCRM, Cloudera, Hortonworks, Pivotal, Pentaho... Yeah, you get the drift.

And then there's this jewel of a quote from the article: If you’re lucky and have a super-successful open source project, maybe a large company will pay you a few bucks for one-time support, or ask you to build a “shim” or a “foo” or a “bar.” Unless I'm misinterpreting Peter here, he seems to be suggesting that companies do not want to, or are not willing to, pay for support for the Open Source solutions they use. All I can say is that this does not match my experience at all. Oh, don't get me wrong... there will always be some percentage of "freeloaders" who use the OSS code and never buy a support subscription. Red Hat know that, and we know that. But what we also know is that most businesses that are using a product for a mission critical purpose want a vendor behind the product, and they are willing to pay for that (as long as the value is there). The fact is, companies want to know that if a system breaks, there is somebody to call who will provide support with an SLA. They want to know that if they need training, there is somebody to call to provide that training. They want to know that if professional services are need for integrations or customizations, that there is somebody that they can call, who knows their shit. And, more prosaically, they want to know that there is a company there to sue if the shit really hits the fan.

So when I read Peter's article, I really don't hear a strong argument that there can't be other successful Open Source companies. In fact, I can't help but think that all he's really saying is "It's hard to build an Open Source company that will generate returns at a scale, and in a timeframe, that's compatible with the goals of Andreesen-Horowitz." And that's a perfectly fine thing to say. Maybe an Open Source company would be a bad investment for A16Z. But that isn't even close to the same thing as suggesting that you can't be successful using Open Source - if your goals and success criteria are different.

Anyway, as far as the whole "next Red Hat" thing goes - the thing is, we don't actually aspire to be "the next Red Hat". We've just used that term because it's a simplification and it's illustrative. But as far as aspirations for where we are going? Nah... In fact, here's the thing. We aren't out to be "the next Microsoft" either. Or "the next IBM". or "the next Oracle" or "the next Amazon.com" and so on and so on, ad infinitum.

No, fuck all that. Our aspirations are far bigger than that. Wait, did I say "bigger"? Maybe I really just meant "different". Bigger isn't always better, and there are other ways to distinguish yourself besides size. Will be be an $11 billion dollar company one day? I don't know. Maybe we'll actually be a $221 billion dollar company. Maybe we'll be a $2 million dollar company. Maybe we'll never make a dime at all.

What I do know is that our plan is this: We are working to build a company that is so fucking awesome that in a few years, people doing startups will go to people and say "We plan to be the next Fogbeam Labs"...